Transport Sector under pressure from Services Directive

10 March 2005

Transport Sector under pressure from Services Directive

The EU Services Directive authored by former Commissioner Frits Bolkestein, which aims to liberalise all service industries, makes an exception of the transport sector. In Article 2 it states that transport services stand outside the scope of the measure. This is all well and good, but unfortunately there’s a sting in the tail, and it is one which means that the Bolkestein Directive would, despite Article 2, offer the enterprising an opportunity to put transport under the hammer.

by Kartika Liotard, Member of the European Parliament for the SP

Although the proposed directive makes an exception of transport, you do not have to study the wording long to see that it is not that straightforward. Transport using cars or minibuses under 3.5 tonnes, taxi firms and the like do in fact clearly fall within the directive’s scope. The already in many cities throughout Europe overcrowded taxi market would be given an extra complication. Courier services and the transport of, for example, people with disabilities, would be exposed to unfair competition from service providers taking advantage of their right to establish themselves in a country where obligations on such enterprises are unexacting. The proposed directive would allow them to follow the rules of the member state in which they are established, rather than the one in which the service was actually offered.

It has been argued by the directive’s supporters that for major freight transport concerns its introduction would change nothing. The Country of Origin principle is not valid for transport firms, while foreign drivers fall under the laws of the country in which they are working, which in the case of my own country would mean the collective agreement, enforceable in law, between workers and employers in the sector. However, in such arguments, from people such as our own Economics Minister Laurens-Jan Brinkhorst, we catch a glimpse of the gap between the world of the politician and the real world of the ordinary citizen. Mr Brinkhorst appears to think that “rules is rules” and that once you’ve made a rule, everyone will simply follow it. Many enterprises will, of course, do just that. But if there’s money to be made there will always, in the real world, be people whose first response to the rules will be to attempt to find a way round them. .

The Services Directive will certainly demand a certain ingenuity from those who seek to use it to put the transport sector under pressure, but you don’t have to look very far before you start to see opportunities in its text. The so-called ’flexibilisation’ of the labour market and the outsourcing of a whole range of services to specialised firms has, during the last fifteen years, really taken off. The Services Directive is likely to lead, quite quickly, to the spread of this process through the transport sector. Freight carriers with their own vehicles and drivers will give way to a system under which self-employed drivers, registered in Poland or one of the other new member states of Central and Eastern Europe, offer their services using their own lorries. Another firm in, say, Latvia, hires out the trucks. And finally a Czech company takes the orders, hires a truck in Latvia and a driver in Poland and off you go. Vehicle hire, needless to say, does fall under the terms of the directive and self-employed drivers are often excluded from collective agreements or labour protection laws. The Services Directive states, moreover, that the country in which a service is offered may not make demands on the provider which refer to the firm’s organisation, or in any way to what sort of company it is. In my hypothetical example, it would be up to the authorities in Poland, Latvia and the Czech Republic to supervise the proceedings, not those of the country in which the transport actually took place.

My example might be hypothetical, but it is certainly not far-fetched. This kind of thing is already going on, as, for example, in the Dutch building industry, which uses many foreign workers as “self-employed personnel”. In the US, many truck drivers are now self-employed, a system designed solely to exclude them from collective agreements negotiated by the relatively powerful trade union in that sector. We should not therefore naively assume that rules will be adhered to, when so much money is at stake.

For transport firms in countries like the Netherlands which adhere to relatively strict national rules on health and safety and working conditions, as much as for their employees, the Services Directive would open the door wide to unfair competition. For the driver from Poland, it means that rather than EU membership bringing his working conditions closer to those of workers in the Netherlands, he will see working conditions throughout the EU brought down to Polish standards.

The Services Directive would, in every service sector, including transport, lead to a race to the bottom throughout Europe. It would mean that, with a few administrative devices, rules in countries like my own could easily be set aside, or avoided.

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